Better regulation for Dubai’s property market
SINCE the property market in many parts of the world crashed, the lack of regulation and transparency in Dubai’s property sector has been fiercely criticised.
However, new regulations have been passed, with many more expected in the future. cashy spoke to Ludmila Yamalova, founder and managing partner of legal firm HPL Yamalova & Plewka JLT, to find out what’s going on. Here’s what she had to say…
When were the first significant changes?
Back in 2007, undoubtedly realising the need to regulate the unprecedented growth of its property market, Dubai began to rapidly introduce a series of legislations.
The intended effect of these regulations was, among other things, to understand the true state of the market. Investors and regulators alike needed to know what off-plan projects were being launched, what sales were taking place, who was selling and how money was being spent.
Laws requiring that all projects are registered with the Real Estate Regulatory Authority (RERA), developers are approved by RERA, sales contracts are registered with RERA and money is deposited into escrow were introduced. Regulations requiring payment plans to be linked to construction and approved by RERA followed shortly.
What about more recently?
Changes continued after the downfall of the property market. Management of many of the biggest developers was swiftly restructured, with subsequent restructuring ongoing today. A specialised property court was introduced. Although, in practice, the property court is part of Dubai Courts and its effectiveness is subject to debate, the intention was to have a dedicated set of judges to deal exclusively with property cases.
A series of regulations by RERA are also noteworthy. One example is RERA’s system of tracking construction progress of projects in Dubai. While it is unclear how comprehensive this system is, it does serve as a useful resource.
Another example is RERA’s recent announcement that it has completed surveying the majority of projects and, on that basis, has cancelled 250 projects. Although, the list of these projects is yet to be published, and might not be at all, the move is positive.
Then there is RERA’s program to pair up approved developers and banks to fund completion of projects. Equally important is RERA’s recent regulation requiring property agents and brokerage companies to be licensed by and registered with RERA. This was in response to cases of real estate agents defrauding investors and renters with a series of scams.
Much progress has taken place and within a rather short timeframe. Few countries can boast such a quick turnaround in their legislative process.
What does the future hold?
RERA has become more approachable, meeting with investors and trying to mediate. It has also been active in the formation of owners’ associations, working with developers and associations. Although that process is still ongoing and much delayed, its activism and openness are encouraging.
Pic credit: photostock/ FreeDigitalPhotos.net
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